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Asset Protection & Investing; What’s Your Defensive Position?

September 27, 2011 By Leave a Comment

I’m not a financial advisor but I work with some of the best ones in the United States because they often have clients that understand the finite and fragile nature of wealth and that we must take proactive steps to protect it. 

One of the top financial advisors I regularly turn to for solutions and answers on insurance and investment issues is my friend Jeff Christenson of Christenson Wealth Management in Phoenix Arizona. Jeff has been an exceptionally important part of the planning of many of my clients, and many more who are not, and works with a very demanding group of people that like all those we work with are substantially more concerned with loss than growth.  Jeff is one of the people that for years insisted that even his HNW clients save for a rainy day, protect their assets and use strategies that limit losses – the last ten years have made his clients loyal believers… many of them survived the losses of their income and businesses by using these assets.

Below is a recent commentary on the markets that Jeff shared with me. His position is honest, open and frankly brave given the very strong opinions many people have on these issues. I hope your investment strategy and advisors have taken these issues into account. I’ve shared Jeff’s message in its entirety. If you’d like to know more about him or receive his updates directly, see his firm’s contact information below. – Ike Devji 

Jeff Christenson, President Christenson Wealth Management

Dear Friends and Clients, 

I have moved, or will be moving, most portfolios to a defensive position. 

We seem to be skating on thin ice, with our economy, our government, and our national deficit. 

This can be viewed as a “contrarian indicator” (for markets) but I think it is actually just ….. bad. 

It is my opinion that the Fed and the President don’t know what to do about the economy, jobs, entitlements, and the staggering debt that could DOUBLE in less than 10 years. 

We were downgraded as a COUNTRY for our own borrowing purposes.  This has never happened.  The short term results can be neutral to unthinkable… 

There are many people and businesses that are just barely hanging on, month to month. 

Gary Shilling believes home values will FALL another 10-20% to simply regress to the MEAN.  Many homeowners are living in their homes without paying their lender.  I have 4 good friends who just went bankrupt.  Who will pay for that?  How many more? 

Gold…..be careful, too many people interested in it right now.  It may also double again, but it is indeed speculative    

The middle class has shrunk, and there are now fewer people with more money, than ever before.  These people are currently sitting tight on that cash. 

Inaction is the wrong thing as a country and as an investor. 

There are things you should be proactive about, asset protection and conservative financial strategies are certainly 2 of them.  

I feel we are EXACTLY where the FED and the President were hoping we would NOT be 3 years after the financial meltdown.  

I recently came across an interesting article* that simply illustrates our government’s fiscal problems by comparing the 2011 Federal Budget to a typical middle-income household’s budget.  Here are the results: 

U.S. Tax revenue:     $2,170,000,000,000 

Fed budget:                 $3,820,000,000,000 

New debt:                    $1,650,000,000,000 

National debt:             $14,271,000,000,000 

Recent budget cut:    $38,500,000,000 

Let’s remove 8 zeros and pretend it’s a household budget: 

Annual family income:                                      $21,700 

Money the family spent:                                 $38,200 

New debt on the credit card:                         $16,500 

Outstanding balance on the credit card:    $142,710 

Total budget cuts:                                               $385  

The harsh reality is that our current level of productivity (or lack thereof) requires revenue (tax) increases, AND spending (entitlement) cuts BOTH.  Politicians get voted OUT for doing these things.  Our household financial woes in this example, have become a popularity contest – not what’s prudent. 

I urge you to Google and do your own research on our national debt.  If we do NOT do this, and FAST, our lenders may soon just stop.  There is no contingency for that.  We are addicted, and Washington has given everyone what they want – when they want it – and the “Physics of Money” simply won’t allow it to continue.  Something has to (and will) give.  It is like giving your kids everything they want and wondering why they grew up to be spoiled and lazy. 

TO BE CLEAR!  I am in favor of raising taxes ONLY if there is a cut in spending.  We have to PAY AS WE GO.  Ask an economist that is NOT a politician or lobbyist.  

When you factor in the demographic shift (Social Security, Medicare, Medicaid etc) and our current low productivity, it is sobering to think of where this money will magically come from in the future….   It is like watching two trains heading toward each other on the same track. 

9-11 should have taught us to be prepared and conservative, but Washington kept taxes low and spent out of control.  

The DOW is currently at about 11,000.   The market is in denial, apparently because these companies are “profitable and cash rich”.  

Consumer confidence is low and the mood of the working and (middle) class is pessimistic.  President Obama (and W too) wrote a bigger check than he could cash, I think.  He (they) made promises to the masses that can’t be kept. 

We are in a period of deleveraging, and asset values can (and I believe) will go lower.  The Pontiac Silverdome was recently purchased for $583,000.   

We MUST prepare. 

There are opportunities RIGHT NOW, and there will be many more for the prepared. 

I reserve the right to be wrong, and maybe the stock market (Dow) might shoot straight up and make me look too conservative and over-concerned. 

But I doubt it.  

Call me for specific strategies. 

Jeff Christenson 

P.S. Please see the attached commentary I emailed out on September 17, 2008.  Interesting to note that at the time, the Dow was at 11388, followed by a market low of 6507 on March 9, 2009**. 

P.P.S.  Times of adversity can yield amazing things.  

I challenge the people reading this letter to one or more of the following: 

  • If you can, hire someone.  If you can’t, MENTOR someone.  You are reading this because you are a successful person, and were handpicked by me to receive it.  SHARE your genius.
  • Ask your neighbor if you can help them with anything.
  • Invent / improve / innovate something.
  • Find something of value that you have that would be of much greater value to someone else, and give it to them.  Help someone less fortunate.
  • Stop complaining about the government and start DOING something about it.  (purpleletter.org)
  • Treasure things money cannot buy.
  • Stay positive, some great things are coming your way! 

*Source:  Federal Budget: http://www.usgovernmentspending.com/ and Federal Revenue: http://www.usgovernmentrevenue.com/#usgs302a  

**Source: http://finance.yahoo.com/echarts?s=%5Edji+interactive#symbol=^dji;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=; 

The views are those of Jeff Christenson and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  Investor cannot directly invest in indices.  Past Performance does not guarantee future results.  

Securities offered through Multi-Financial Securities Corporation, Member FINRA/SIPC 

Christenson Wealth Management and Multi-Financial Securities Corporation are separate companies. 

Please consult with a qualified tax advisor prior to implementing any tax related strategy. 

For more information on Jeff, Christenson Wealth Management or to receive future economic commentary please visit www.HabitsOfWealth.Com or call (602) 808-5580.

Filed Under: arizona economy, Asset Protection, economy, investing, investment exposure, Jeff Christenson, recession, recession survival Tagged With: , , , , , , , ,

The Common Traits of Long-Term Wealth – Staying Rich

May 27, 2011 By 1 Comment

Ike Devji, J.D.

I have been fortunate to work with some of the most successful people in America through the course of

my career. All of them excel at something; medicine, business, real-estate development, science, and

even the arts. What this vastly diverse crowd has in common (besides money) though are a set of traits

that have made them not only good at what they do but wealthy and successful by any standard in a

long-term and predictable way; here are a few of the most notable ones:

They Work Hard: Nearly all of them are the source of their own wealth. That is, they get up every day

and commit themselves to the practice of some profession with skill, passion and diligence. They always

strive to be smarter, more informed about their market and more skilled at what they do than the day

before.

They Never Take Their Market Position for Granted: They understand that in a down economy discount

solution, product, and service providers emerge in every market. They know competitors will be selling

price first and many consumers won’t see the differences until they have been poorly served. They make

sure their marketing efforts, network, and professional relationships are as important and well-nurtured

as they were before the reached their current level of success. “Good Enough” is not part of their

vocabulary.

They are Team Players: They look for every way to add value and collaborate with other top service

providers in their field so that they are a natural part of every project or client they are involved with.

They associate with other best-of-class teams and attend professional education and networking events

on a regular basis.

They Are Proactive, Not Reactive: They take preventative care of their health, business, and known

liabilities and plan to avoid problems, not manage them. They understand that a small amount of time

and resources directed at these issues now will save them vast amounts of energy and money in the

future and gives them the greatest number of options. They understand that preventing an illness,

whether physical or financial is almost always better than treating it.

They Understand Wealth is Finite and Fragile: They live very well, but also “well within” their means.

They are willing and able to adjust their lifestyles and spending to adjust for market realities and income

fluctuations. They have money in the bank, not just on their wrists, and can handle fluctuations is cash

flow and earnings as well as most common unplanned expenses without panic or liquidating large assets

at a bad time in the market. They get that an important part of wealth is “having some.”

They Prioritize and Do “Boring” Things Before Spending on Lifestyle: They buy life, health, and

disability insurance, get estate and asset-protection planning, stick to savings and investment plans and

other things that often have a hard time competing with new cars and vacations. They are financially

disciplined and meet the mental commitments they have made to their families and future wealth and

success before meeting today’s “wants.”

They Create Success Maintenance Teams: They identify top professionals in various areas, create

relationships with them and act decisively to implement their suggestions and expertise. They have

control of their egos and understand that as bright and successful as that are, they are better off being

surrounded by experts in areas outside their field. They know “what they don’t know” and are willing

and able to delegate responsibility to others and let go enough to be free to do what they are best at,

which is never everything.

They read Physicians Practice regularly: And other sources of information that present a wide range of

expert guidance and stimulate critical thinking. They know that their learning is a lifetime process and

they never stop.

This article originally appeared at www.PhysiciansPractice.com the nation’s leading practice management resource, where Ike Devji is a regular contributor. It is reprinted here with permission. My thanks to Jeff Christenson at Christenson Wealth Management for his ongoing guidance on many financial issues that affect the wealth of my clients.

Filed Under: Asset Protection, business legal planning, Finance, high net worth, professional athletes, professional entertainers, recession survival Tagged With: , , , , , ,

Due Dilligence and Why the Background Check You Used Won’t Work

March 11, 2011 By Leave a Comment

   

Due Dilligence Expert Greg George

Due Diligence is a commonly overlooked or underestimated  tool, and a an essential plan of any business venture or financial entanglement, especially now in the golden age of fraud. One of my top resources for clients is Greg George of GTI Advisors, he shares some exeprt insight on the false comfort of commercially available background checks below.  – Ike Devji  

There is No Such Thing as a ‘National’ Criminal Background Check for $29.95

A comprehensive background investigation is a must do for principals involved with various business transactions, private investments, bringing in new partners, examining suppliers and reviewing key hires for your company.  In spite of what many background screening companies across the country claim and try to sell you, there is no such thing as a “National Criminal Record Database Check for $29.95.”  
Although our firm does enjoy privileged access when undertaking criminal investigations on behalf of corporate clients and working with law enforcement, the data compiled by the National Crime Information Computer (NCIC), maintained by the FBI, the Law Enforcement Information Network (LEIN), maintained by each individual state, and other government information assembled by law enforcement on criminal matters IS NOT AVAILABLE for sale to private industry, and such sale or unauthorized access would violate both federal and state law. 
   

Best [research] methods for decision makers in the private sector to verify identity and achieve optimum results for criminal and civil record research in the U. S. include the following. A different criteria is applied when researching offshore issues, depending upon the country, the culture, and other specifics.  

  • Verify the subject’s social security number. This will show that the SSN was actually issued to this person as well as when and where it was issued.
  • Hand-search county court records in each jurisdiction where the subject has resided based on his or her address history. The statistical example: 85% of all arrests and convictions occur in the county of residence. However, take care when selecting your research supplier – they should be able to provide thorough research coverage extending to all 3,227 (or so, at last count) state counties, independent cities and township or village corporations across the United States.
  • Complete a federal criminal records search. A federal conviction or other information which indicates the subject may be or has been involved with federal authorities will not be revealed in a state county records check.
  • Narrow an online search of the thousands of news feeds for an arrest hit, if found, verify disposition of charges at the court of proper jurisdiction.
  • Become familiar with the Fair Credit Reporting Act – “FCRA”, available online prior to hiring employees. Any background research for employment purposes, (including obtaining a credit report), requires a separate stand-alone written release from the candidate. Most states have adopted the FCRA model in their respective legislation and several states also have further compliance mandates you need to follow. For due diligence review matters regarding private equity closings and other consumer initiated commercial transactions, the rules are a little different.

Specific purpose due diligence and employment background research can take on many forms, requiring various criteria to be addressed. My firm has provided research services ranging from basic criminal records reviews up through full field background investigations. Depending on the specific industry and employment position being filled (primarily corporate-level, financial, scientific, and other key staff positions), we may also recommend conducting additional interviews of past employers, business partners, neighbors, and other associates.
   

Suggested Baseline Criteria for Background Research on Individuals
Regarding due diligence research for investment, joint venture, merger, acquisition, other partnership opportunities or a key hire our recommended research criteria varies depending upon the specific industry.  However, here is what I suggest as a common baseline to examine for all individuals:  

  • Identity verification.
  • Criminal convictions.
  • History of civil litigation as plaintiff or defendant.
  • Bankruptcies, liens, judgments, and other adverse filings.
  • Past business associations, employment verification and reference interviews.
  • Verification of colleges and schools attended and highest degree awarded.
  • Global financial intelligence network lookouts on persons and businesses; alert reporting data: U.S. Treasury Financial Crimes Enforcement Network, Interpol lookouts (Special attention to Asia, Russia, European Union) and comply with U.S. Patriot Act requirements.
  • Check for U.S. Treasury Office of Foreign Asset Control sanctioned/disallowed persons and businesses BEFORE you commit to hiring or to any transaction, anywhere.
  • Verification and review of regulatory sanctions and disciplinary actions regarding professional licensing.
  • When an individual is associated with a company you’re considering doing business with, review the company’s standing, fictitious names found, various filings, and officers listed when doing research on private or closely held businesses as either a separate engagement or along with individuals under review. Utilize the same recommended research strategy for individuals regarding fraud alerts and research for other adverse filings the company may be involved with.
  • Deep media research for articles about the individual or company

Deeper Research May Provide Undisclosed Information You Should Know About
Our firm recently provided due diligence research for a venture capital firm based in Southern Florida. During our engagement, we discovered one principal on the management team of the company seeking funding was a medical doctor under investigation by state licensing authorities regarding several complaints.  This investigation may lead to disciplinary action or criminal charges against the doctor. The existence of the state investigation was not initially disclosed to the venture capital firm.  If the venture capital firm had not ‘looked’ before they closed on the deal, an adverse outcome of the state review could have affected the credibility of the investment firm and become a formidable liability if investment money had already been given to this new medical technology company.  
My experience with government services, particularly consulting on investigations and reviews of candidates applying for sensitive positions requiring U.S. Government security clearances, a clear dis-qualifier for most is when information is not voluntarily disclosed and discussed up front. People make mistakes; this does not mean they’re bad people. And, events do occur in life requiring each of us to face many challenges at times, such as a medical bankruptcy or other factors resulting in unforeseen financial distress.  
Criteria for refusal of a candidate should not be automatic upon the disclosure/discovery of negative or potentially adverse information. A frank discussion with the candidate or potential business partner to review background information is certainly appropriate. If you choose to proceed after these discussions, remember – trust is important, but verify.  


In addition to vetting people and companies before engaging, clients often consult with us to assist with composing appropriate language to include in funding term sheets that address “contingent upon outcome of background review” or other related stipulations. As part of our assistance, we urge our clients to at least seek an initial background reviews before committing much time, resources, and effort to their quest.  All things considered, the costs of background research are nominal and analysis of the results provides a significant tool to support informed decisions.
_______________________________________________________
Greg George is a senior advisor to professional services firms, CxO’s, investors, family office groups, and global banking center directors.  Greg’s firm operates an intelligence fusion center available to private sectors providing investigative and operational due diligence analysis, and guidance addressing security operations, fraud, compliance, internal investigations and countering insider and espionage threats.  Greg can be contacted by email: greg@gti-advisors.com or visit http://gti-advisors.com

Filed Under: Asset Protection, business legal planning, business survival, Due Dilligence, Family Office, fraud, Greg George, GTI ADVISORS, Ike Devji, investing, investment exposure, scams, venture capital Tagged With: , , , , , , ,